Second hand cars in Mumbai sales- will Nano be a boon or a bane?

On the heels of the launch of the small car from auto major Tata Motors, the Nano, used cars for sale in Mumbai are bearing the brunt, which led dealers to reduce their prices of second hand cars in Mumbai by a whopping 25-35 percent. To compete with the Nano, industry experts noted that, dealers are slashing their model rates to close in on the 1 lakh mark.

A negative of 25 and 20 percent is witnessed in the price, of a used car in Mumbai, of mid-sized and small car respectively. For a cost of around Rs 1 lakh, dealers are offering half-a-decade old Opel Corsa, Maruti esteem, Ford Ikon or say a Fiat Sienna.

The value of the small car segment definitely saw a correction when the Tata Nano was launched. In the used car segment of small cars, the erosion of value is comparatively far from other categories. To clear inventories, car makers have resorted to offering discounts and have reduced the prices of their new cars. This is having a direct proportional effect on the prices of the used cars for sale. Customers are now seen to be developing a keen eye for detail pertaining to this development in the second hand cars market.

The question that begs an answer is, why any buyer would shell out Rs 1 lakh for the base variant of the Nano, when he can feast on 4-5 year old mid-sized car plus all the features for almost the same price.

The demand pressure has decreased for used cars for sale in Mumbai in recent months. Bearish market trends coupled with lesser and lesser finance options are keeping the buyers at bay. Major Banks, in addition to PSU and Co-operative banks, have stopped funding for purchases of used cars.

Sky-rocketing interest rates for second hand cars in Mumbai and choosiness of the banks are other culprits in this downturn of events. The pressures on margin have led to organized used car dealers to accumulate a huge inventory of cars, which they are not in a position to liquidate.

But all is not so gloomy in these circumstances, few dealers are optimistic that the launch of Tata Nano will actually create a momentum for the second cars in Mumbai.

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